// Cath Kidston places administrators from Alvarez & Marsal on standby
// The retailer had already been undertaking an urgent review and was urgently seeking a buyer
// The sale process was still ongoing, and credible expressions of interest have been received
Cath Kidston is at risk of becoming the next major coronavirus-related casualty in UK retail after it filed a notice of intention to appoint administrators.
According to Sky News, Cath Kidston placed administrators from Alvarez & Marsal on standby yesterday.
Advisers from Alvarez & Marsal had been drafted in two weeks ago to undertake an urgent review of Cath Kidston’s strategic options, which was already racing to find a new buyer.
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Prospective bidders had already been told that offers for the retailer, which is majority owned by Baring Private Equity Asia, were required imminently.
Sky News reported that the sale process was still ongoing, and that a number of credible expressions of interest in a takeover have been received.
A notice of intention to appoint administrators means Cath Kidston would be granted 10 days of breathing space and protection from creditors.
It does not automatically mean it would fall into administration.
“The notice of intention forms part of the process by which Cath Kidston is continuing to work with Alvarez & Marsal to explore all options for the company in the current climate,” a Cath Kidston spokesman said.
The news comes a day after reports emerged that Debenhams placed administrators on standby for a fresh insolvency process 12 months after its last administration.
Laura Ashley is thought to be the first major UK retailer to have filed for administration due to the coronavirus crisis, which was soon followed by BrightHouse and Lombok.
Cath Kidston employs about 800 people across 60 stores in the UK.
It also has more than 100 stores overseas, especially in Asia, although it is not clear of its international arm is part of the business review.
Baring Private Equity Asia became a substantial shareholder in Cath Kidston in 2014 before it took full control in 2016.
The coronavirus pandemic, as with many other retailers, has worsened Cath Kidston’s financial state and speculation has been rife that an administration would be likely if a new buyer were not found.
The British retailer, which sells clothes and homeware, lost more than £27 million in the last two financial years.
It also recorded an additional loss of £11 million before interest, tax, depreciation and amortisation in the nine months to December, according to information sent to potential bidders.
However, it’s thought that chief executive Melinda Paraie’s turnaround strategy for Cath Kidston had started to bear fruit prior to the coronavirus pandemic.
This includes cutting operating costs through a 40 per cent reduction of head office staff and closing underperforming shops, and a boost in online sales thanks to a new ecommerce platform.